PUBLIC MEMORY is notorious for being short, but one expects different from leading intellectuals. Unless, of course, they have decided to go rogue.
Is the farmers’ agitation watching this rogue phenomenon being played out in public discourse?
Aarhtiyas are at the centre and forefront of the ongoing agitation which, very rightfully, is demanding justice. While on paper, and symbolically, the landless farm labourers are supposed to be part of the struggle, the fact is that the agitation is primarily centered around the farmers, with aarhtiyas and traders backing it to the hilt, while the farm labourer is marginalised even among the marginalised.
The sweet tunes playing out in news television bites about the remarkably romantic relationship between nails and human flesh – naunh maas da rishta – will make any serious student of the commission agent system feel like nauseous. Nothing could be further from the truth, but when you need forces in a battle, why turn away a warrior who brings wealth and heft to the battleground?
Not long back, the same farmer unions were up in arms against the arhtiya system, and wanted to completely abolish the entity called arhtiyas. Top economists and scholars who are today spending much ink in op-ed articles were writing with pens dipped in vitriol against the arhtiyas who, they were claiming, were nothing but “blood sucker elements” of society.
Rewind ten years to 2010.
Akali Dal’s government in Punjab had declared it would give farmers direct payment but had gone back on it with egg on its face. The aarhtiyas were fumbling for excuses. Prakash Singh Badal had come up with this ‘naunh maas da rishta‘ drama, and had asked the aarhtiyas to start paying the farmers within seven days of buying the crop.
Top farmer leaders were demanding that the aarhtiya be thrown out of the agriculture sector after a good hundred year run in Punjab. A PAU study had triggered and intensified the debate. The FCI had already served an ultimatum.
The same farmer union leaders who today don green turbans and march in step with the arhtiya leaders had claimed that the commission agents had enslaved Punjab’s farmers and had a stranglehold on marketing system.
They used to tell us that the aarhtiya could keep the farmer in a vice-like grip, and then pose as his saviour by lending him money at shameful rates of interest. Aarhtiyas had become an arrived class, while farm sector slipped into a crisis.
But What Does An Aarhtiya Do? That is, apart from claiming to be farmers’ friend and having a “Naunh Maas Da Rishta“, whatever that means?
The farmer brings his produce to the market, and the government buys it through the aarhtiya. Then the government gives the money to the aarhtiya, and he pays the farmer. In this transaction, he pockets a commission of 2.5 per cent. So far, so simple.
The story starts getting complex when you know that government is under obligation to buy, that it has to buy at a fixed pre-announced rate, that the market where the government must buy is pre-determined and pre-declared, that all market facilities are provided by the government, that the farmer pays separately for maintaining those markets and facilities, and that the aarhtiya pays only after he gets the money from the government.
Then, what exactly does the aarhtiya do to earn that 2.5 per cent of commission? Well, we would have said it was a million dollar question, but the crux of the path-breaking eye-opener study by the Punjab Agricultural University, Ludhiana, made us cautious lest the aarhtiyas demand a 2.5 per cent commission on the million dollar question.
When the Parkash Singh Badal took a decision that the farmers would be paid directly rather than through the aarhtiyas, the commission agent lobby torpedoed it. It was not just an announcement. The government decision was actually notified with a date from which it was to become effective. But so beholden are politicians to the rich arhtiyas that when Badal made a personal appeal to them to start paying the farmers within seven days of selling their produce, the aarhtiyas tried to wriggle out by saying that they will do so only if the government agencies first paid them within 48 hours.
In effect, the aarhtiya was saying that the Government of India must move fast enough from Raisina Hill to a back-of-the-beyond grain market to pay him within 48 hours, only then would he move fast enough to pay the farmer next door in the next 72 hours.
The question “Do we need aarhtiyas in Punjab?” was changed into whether the farmers should get direct payment from the government or not. The aarhtiyas changed the question to whether it was fair on the part of the government to give farmers the money for produce within seven days of buying the crop.
Now that the Punjab farm union leaders are happily telling you that farmers from states like Uttar Pradesh and Madhya Pradesh are also joining in the agitation, may be they will also learn how other states have dealt with this “nauhn mass da rishta“. States like Madhya Pradesh had ended the arhtiya system in the 1980s itself.
Neither the farmer union leaders nor the aarhtiyas nor the Modi government’s apologists are now telling you that the Food Corporation of India (FCI) had in 2010 declared that it will make direct payment to farmers. The great friends of the farmers today, the aarhtiyas, felt so bad about farmers getting direct payments from FCI that they announced a boycott of procurement of paddy that was to start on October 1, 2010.
The broad-spectrum of farmers wanted the aarhtiya out. Farm union leaders were demanding that the government should find out how many aarhtiyas have gotten transferred the land pieces in their name after the loan-availing farmers’ failure to repay.
Dr. Sukhpal Singh of Punjab Agricultural University, Ludhiana, who, alongwith Tejinder K Dhaliwal, had led an authoritative research on “Commission Agent System in Punjab Agriculture”, was clear that the time had come for the procurement agencies and government to deal directly with the farmers without the middleman called aarhtiya.
Farm union leaders, including Joginder Singh Ugrahan and former MP and BKU president Bhupinder Singh Mann are on record as saying that not paying the farmer directly was “illegal, unethical and anti-social” policy.
Talk of tradition
Since there is so much talk about the “tradition” governing the aarhtiya-farmer relations, we need to dwell on it. The PAU study claimed that the change of aarhtiya by the farmer was “very rare” up to the late 1970s. But with the entry of non-traditional commission agents in this profession, particularly the Jat arhtiyas, things changed to some extent.
“It is interesting to know that about 44 per cent of the farmers are still dealing with the same commission agent for more than one generation. The indebted farmers are not in a position to repay the whole amount of debt in a single season; this among other factors is the reason why the farmers remain bonded with the same commission agent. Due to this the change of aarhtiya among farmers is not a common phenomenon. Basically, this change is very difficult as the farmers have to take the informal clearance from the old commission agents by clearing their dues for joining the new commission agent.” Exploitation runs in the family. No?
The fact is that the Commission agents have earned huge surplus capital from this profession and have invested it in not only other business activities but also in endearing themselves to the ruling classes, politicians.
The commission agent of today is part of the larger nexus of politician-criminal-transporter-sand mining mafia-bus permit mafia-liquor barons-real estate property dealers-polluting industry-sugar mill-rice sheller-contractor buckyball structure.
It is the Commission agents who sell pesticide/ fertilizers, it is they who have the surplus that you need to speculate in property business. No one knows better than the aarhtiya about which particular farmer is in a deep-shit crisis and is the most vulnerable, and will sell his land for a pittance.
To quote directly from the study, here is what the PAU scientists had to say about the arhtiya-farmer social relationship:
“An age old myth about ‘nail and flesh relationship’ (Nauh mass da rishta) among farmers and commission agents is widely publicised in the popular media. The prevalence and relevance of commission agent system in the Punjab agriculture is claimed by the commission agents on the basis of its sustainability since generations. The commission agents argued that they have a well-knit relationship with the farmers as both the parties have blind faith in each other. Nowadays, significant changes have been noticed in this relationship. Although the traditional commission agents were professionally very smart, they were sober and polite in dealing. This picture has changed to rudeness and arrogance to some extent due to the entry of Jats into this profession.”
Calculating the Commission
Certain significant strands of the farmer-arhtiya debate have been brushed under the carpet to push the ‘nail and flesh relationship’ nonsense.
Why, for example, have we not seen any questions raised about how and on what basis is the commission calculated? Also, on what basis did the then Parkash Singh Badal government hike the commission from two per cent to 2.5 per cent?
In 1961, the rate of commission was 1.5 per cent, by 1990 when it was clearly time to end the institution of aarhtiya, this rate was actually raised to 2 per cent. Then, in 1998, it was raised to 2.5 per cent for food grain and to a whopping 5 per cent for fruits and vegetables.
Also, it is important to note and but is hardly mentioned that the market charges have been the highest in Punjab for long, clocking at 13.5 per cent of the value of the produce. The break up includes 4 per cent purchase tax, 3 per cent infrastructure cess on wheat and paddy (2 pc for cotton), 2 pc market fee, 2 pc rural development fund and 2.5 pc commission for the aarhtiya.
The commission went up when it was proven beyond doubt that the commission agents did not have any significant role in the procurement of crops like wheat and paddy. In which other market in the world do you find middlemen in an assured market paradigm?
Why are we shutting out the truth that every one of us knows only too well? The commission agents are a rich class by themselves. The commission agents are a major funder of political parties. Each commission agent is closely interlinked with politicians. The commission agents are also money lenders.
Under the law, any commission agent who is a money lender and charges any interest is committing an illegal activity. Everyone knows how wide sections are committing this illegal act. Now, everyone wants to find not a solution as per law but only a “pragmatic” solution.
For decades, the word “agent” has remained a kind of slur in Punjabi society. Badals have often called one or the other rival Akali leader as an “agent of the Congress”. His detractors often call him “an agent of the RSS-BJP”. Even among militants, the renegades are called “agents of agencies”. You can well imagine how a commission agent is seen in Punjab!
It will be interesting for you to ask around how many and which farm union leaders are themselves arhtiyas, too?
And as we said, it is a rich class. Let any of the top farm economists of Punjab, be it Dr Sucha Singh Gill or his bête noire Dr Gian Singh, come up with a figure of how much the commission agents earn in commission from Punjab’s farmers in a year. In just 2009-2010, a whole ten years ago, the commission agents had earned a sum of Rs 784 crores from all the crops. Imagine what the figure will be today! And then keep in mind that we are only talking about white money. Even this whopping figure will be peanuts because as almost everyone knows, and thankfully, no one denies, the main source of income of commission agents is not the commission charged on the sale/purchase of crops but the interest charged from farmers for the credit advanced to them.
The PAU study showed that an average commission agent advances a loan of Rs. 65.74 lakh to farmers. This accrues an interest of Rs. 15.78 lakh per annum. Out of the then total debt of Rs. 35,000 crores on Punjab farmers during 2008-09, it was estimated that Rs. 13,300 crores (38%) was advanced by the non-institutional credit agencies in which commission agent was the major source of finance.
Commission Agent Is Actually A Money Lender
As the farmer union leaders and arhtiyas frolic together in a lovebath at the Singhu Border, no one is recalling the intense debate that raged about the very need for commission agents, nor about merits of direct payment. So much so that no hue and cry is being raised even about the fact that commission agents are actually money lenders. Their role as commission agent is something that gives them real power over their clients who are farmers and who often depend upon them for loans. In law, the commission agent cannot be a money lender, and to lend money, he has to register as a money lender. Not one has done so across Punjab.
In law, punitive legal action becomes imperative the moment it is proven that any commission agent has lent any amount of money to any farmer. But since so many flout the law so blatantly and they have been doing so for so many years, most of the stake holders have simply lost sight of the fact that wholesale violation of law should have invited a sledgehammer response from the government to put an end to the pernicious practice.
But that does not happen, simply because the commission agent cum money lender lobby is a major stake holder in the ruling classes, a significant funder of political parties and enjoys across the political lines support.
As per law a person involved in money-lending business must register himself as a moneylender. The Punjab Registration of Moneylenders Act 1938 states that the suits for the recovery of loan could be filed by registered moneylenders with a valid license. This law laid an obligation on the moneylender to regularly maintain an account for each debtor separately, of all transactions relating to any loan advanced to that debtor. The government prescribed the manner in which accounts had to be kept. Moreover, creditor had to furnish each debtor every six months, with a legible statement of accounts signed by the creditor or his agent of any balance or amount that may be outstanding on 30th June or 31st December. But practically, at all levels, there is a violation of this Act.
Not a single commission agent has registered ever in Punjab for the business of money-lending.
Commission agents are around the corner guys and, therefore, more accessible. The farmers are increasingly in a desperate situation, thanks to the skewed farm policies. And as we all know only too well, any farmer caught in a cleft-stick of inimical market situation and apathetic state response is vulnerable to consent to high interest rates from the only quarter who is accessible to him for a small loan. The aarhtiya in his avatar as a money lender is a godsend in such a situation. For the aarhtiya, the farmer who comes begging for a loan in a desperate situation is a god-sent customer. Woebegone such a god, but then he has been helping the money lender for centuries!
And that today becomes an argument not to throw out the arhtiya, but to keep the arhtiya because Modi wants to throw out the MSP system!
The PAU study minced no words in saying that the money lender aarhtiya “exploits the farmers by charging exorbitant rate of interest, supplying spurious farm inputs and through other various malpractices in the marketing activities.”
Even the PAU study was weak on this aspect though at one stage, it candidly stated that “around nine commission agents disclosed that they also borrow money from large farmers, police officials, and bureaucrats and from other servicemen. The rate of interest charged by these people is higher than that of the institutional sources.”
“They disclosed that big farmers who are politically well connected, police officers and bureaucrats think that their money is always safe with the commission agents from two angles. Firstly, the money can be kept secret as black money and secondly, they can get it back as and when they want with political power and authority as commission agents will not dare to cheat them.”
It is a pity the Commission Agents are not tom-tomming the study as a proof of their being good borrowers themselves.
Large Farmers & Commission Agents
But why have the large farmers who have the muscle and money not rebelled against the Commission Agent? Here is a peep from the PAU study:
“The Market Act envisaged commission from the buyer only. However the commission agents continued to charge the commission from some farmers, to whom they had advanced some loans, which generally included the small farmers who were not aware of the legality of it. As the awareness increased the commission agents stopped charging the commission from the farmers, particularly since 1990s. On the other hand, the field survey also reveals that some large farmers negotiate to get 1 per cent to 1.25 per cent of the commission which is paid by the procurement agencies to commission agents. This shows that the large farmers who are educated and have surplus capital are in a position to negotiate everywhere, including with the commission agents. This is the same class that invests money in many allied activities or commission agent business.”
Leading agriculture economist Professor Sukhpal Singh of the Indian Institute of Management (IIM), Ahmedabad, in his recent study on reforming agricultural markets in Punjab has also argued that it is time to get rid of the arhtiya. His work is part of the policy series by the Punjabi University’s Centre for Development Economics and Innovation Studies.
“The interlocking of the credit, input and output markets by the arhtiyas in the state has led to farmer indebtedness in the context of poor institutional credit reach which is both inadequate and costlier due to higher transaction costs despite its lower interest rate,” the study said.
In fact, Prof Sukhpal Singh considers the arhtiyas are a root cause for the farmers’ troubles. He claims that the system of payment for the farmer produce through arhtiyas was bad as arhtiyas are unregistered, unregulated, and indulge in informal money lending at high rates of interest. They also supply farm inputs and groceries to farmers on seasonal credit.
What the farmers need, as per farm economists like Dr Sukhpal Singh (IIM), is more accessible formal credit system, better designed financing programmes for farm sector and better institutional credit delivery. Not the naunh maas da rishta type non-sense in which the nail has been biting into the flesh for a century, and now at the Singhu Border, too.
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